pms suresh
TRANSCRIPT
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Prepared & Presented by
Suresh Ch. Panda( MBA, Finance)
PORTFOLIO
MANAGEMENTSERVICES(PMS)
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What is Portfolio Management
Services (PMS)?
Portfolio Management Services (PMS)
is an investment portfolio in stocks, fixed
income, debt, structured products and otherindividual securities, managed by a
professional money manager that can
potentially be tailored to meet specific
investment objectives.
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Who can offer PMS?
PMS can be offered only by
entities having specific SEBI registration
for rendering portfolio management
services.Currently in India PMS is
offered primarily by asset management
companies (AMCs) and brokerage
houses.
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Investment Limit ?
As per SEBI guidelines, the
minimum investment required to open a
PMS account is Rs 5 lacs. ( Changed
to Rs. 25 lacs from Feb. 2013.)However, different providers
have different minimum balance
requirement for different products.
1. Birla AMC PMS- Rs 25 lacs
2.HSBC AMCPMS-Rs . 50 lacs
3. Reliance AMC PMS- Rs 1 core
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Objectives of Portfolio Management
1. Stable Current Return:-Once investment safety is guaranteed, the portfolio
should yield a steady current income.
The current returns should at least match the
opportunity cost of the funds of the investor.
2. Marketability:-
A good portfolio consists of investment, which
can be marketed without difficulty.If there are too many unlisted or inactive
shares in your portfolio, you will face problems in encasingthem, and switching from one investment to another.
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CONTD
3. Tax Planning:-
Since taxation is an important variable in total planning,a good portfolio should enable its owner to enjoy a favorable taxshelter.
The portfolio should be developed considering not only
income tax, but capital gains tax, and gift tax, as well.
4. Appreciation in the value of capital:-A good portfolio should appreciate in value in order to
protect the investor from any erosion in purchasing power dueto inflation.
In other words, a balanced portfolio must consist ofcertain investments, which tend to appreciate in real value afteradjusting for inflation.
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CONTD
5. Liquidity:-
The portfolio should ensure that there are enoughfunds available at short notice to take care of the investors
liquidity requirements.It is desirable to keep a line of credit from a bank
for use in case it becomes necessary to participate in right
issues, or for any other personal needs.
6. Safety of the investment:-Investment safety or minimization of risks is one of
the important objectives.
There are many types of risks, which are associatedwith investment in equity stocks, including super stocks.
You can try and minimize the overall risk or bring it toan acceptable level by developing a balanced and efficient portfolio.
A good portfolio of growth stocks satisfies the entireobjectives outline above.
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TYPES OF PORTFOLIO
MANAGEMENT SERVICES
TYPES OFPORTFOLIO
MANAGEMENT
Discretionary Non Discretionary Advisory
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CONTD.
1} Discretionary:Under these services, the choice as well as the
timings of the investment decisions rest solely withthe Portfolio Manager.
2} Non Discretionary:Under these services, the portfolio manager
only suggests the investment ideas.
The choice as well as the timings of theinvestment decisions rest solely with the Investor.However the execution of trade is done by the
portfolio manager.
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CONTD
3}Advisory:
Under these services, the portfolio
manager only suggests the investment ideas.The choice as well as the execution ofthe investment decisions rest solely with theInvestor.
Note: In India majority of PMS providers offerDiscretionary Services.
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How can an investor innvest in a
PMS?By cheque paymnent or
through transfering existing shares by the yby the
customer to the PMS account.Documents Required
PMS agreement with the provider.
Power of Attorney agreement.
New Demat account opening format. (even if he has ademat account).
PAN Card, Address proof, Identity proof etc.
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PMS CHARGESDecided at the time of investment and vetted by the
customer.1. Entry Load:- may have entry load of 3%.2. Management Charges:- Vary from 1% to 3 % depending
upon the provider. Charged quarterly basis from thePMS account.
3. Profit Sharing:- Some schemes have profit sharingarrangement in addition to fixed charges.Other Charges
Custodian fee.
Demat account opening charged. Audit charges. Transaction Brokerage etc.
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Working of PMS
Each PMS account is unique and the valuation and
portfolio of each account differ from one another.
There is no NAV for a PMS scheme. Howevercustomer will get the valuation of his portfolio on a
daily/weekly/fortnightly basis from the provider.
Each transaction will be considered as independenttrade and capital gain will be applicable on each
depending upon whether the relevant stock was held
short term or long term as per the prevailing tax laws.
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Recapitulation
PMS is an investment portfolio in different finacial
instruments.
Offered by registered entities like AMC & Brokerage houses in
India.
Minimum investment is 25 lacs & no maximum limit. Investment objectives-Liquidity, Safety, Stable returns, Tax
planning etc.
Opening of a PMS Account by cheque payment or transferring
securities. PMS charges are mutually agreed.
Unlike Mutual funds where you own units in PMS you own
individual securities.
Freedom & flexibility to tailor your portfolio to address your
preferences & financial goals..
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